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If nominal GDP was $10,000 billion in 2002 and the price level in 2002 was 103.8,...

If nominal GDP was $10,000 billion in 2002 and the price level in 2002 was 103.8, then real GDP would have been approximately: a. $10,380 billion. b. $9896.2 billion. c. $10,000 billion. d. $9,633.9 billion.

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Answer #1

Ans. a. $10,380 billion.

GDP deflator = Nominal GDP/ Real GDP x 100

Real GDP = GDP deflator x Nomnal GDP /100

= 103.8 x $10,000 billion /100

= $10,380 billion

NOTE: 1. GDP deflator represents the price level.

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